The advantages of a private unlimited company start-up

The advantages of a private unlimited company startup: unlimited organisations tend to be less common and certainly less well known than their limited counterparts, partly thanks to the fact that it's not legally required in all cases for a corporation to include the 'Ultd' qualifier after its name. Some notable examples of this type of incorporation include GlaxoSmithKline Services Unlimited and Credit Suisse International - the UK extension of Credit Suisse. So it's clear that for some business models this is the way forward. But what exactly are the advantages of this form of business structure over a limited company?

Obvious responsibility: an unlimited corporation means a company in which the legal liability of individual shareholders and members is unlimited. This essentially means that in the event of liquidation, these members and shareholders are legally required to settle matters - namely outstanding financial responsibilities. So, unlike a private company, creditors can have access to the assets of shareholders and members, but only if there is a formal liquidation. Until then the finances operate in much the same way as a limited company.

One of the main direct advantages of this is an obvious boost to creditor confidence. The fact that members and shareholders share the responsibilities of the company's assets means that insolvency is less likely in an unlimited company than a limited company. There is a general understanding that unlimited companies formation have a better standard of practices when it comes to executive management, and that the business model focuses on minimising risk.

Keeping things private: it is also recognised that a private unlimited company can have greater control over the details of its transactions than a limited company. For example, an unlimited company registered in the UK is usually not made to publish financial statements. This means that shareholder dividends aren't necessarily made public, and that the affairs of the business are kept hidden from competitors that might seek to gain an advantage from those details.

Central capital: a final point is that the nature of a private unlimited company means that it sustains itself on the profits of its own trading and capital, so there's a lower dependency on high street banks for loans. If you need to discuss more issues about how to open a private unlimited company, please contact us by phone or e-mail.